PHILADELPHIA, PA - Five Below Inc . (NASDAQ: NASDAQ:FIVE), a popular discount retailer, reported first-quarter earnings that fell short of Wall Street expectations, with a significant downturn in its stock by 12% in response to both earnings and future guidance misses.
The company posted adjusted earnings per share (EPS) of $0.60 for the quarter, which was below the analyst consensus of $0.63. Revenue also missed the mark, coming in at $811.9 million against expectations of $835.01 million.
Despite an 11.8% increase in net sales compared to the first quarter of the previous fiscal year, Five Below's comparable sales saw a 2.3% decrease. The company's operating income also declined to $36.2 million from $42.4 million a year ago, impacted by a non-recurring legal expense.
Adjusted for this expense, operating income would have been $38.2 million. The effective tax rate increased to 23.5%, up from 18.6% in the same period last year, further affecting net income which dropped to $31.5 million from $37.5 million. Without the legal expense, adjusted net income would have been $33.0 million.
Joel Anderson, President and CEO, commented on the results, "While our first quarter sales were disappointing, disciplined cost management enabled us to deliver adjusted EPS within our earnings outlook."
He noted that needs-based items performed well but acknowledged the overall decline in comparable sales, attributing it to the challenging macro environment affecting lower-income customers.
Looking ahead, Five Below's second-quarter guidance anticipates EPS to be between $0.57 and $0.69, starkly lower than the analyst consensus of $0.99. Revenue forecasts for the second quarter are set at $830 million to $850 million, also below the expected $883 million.
For the full fiscal year 2025, the company expects EPS to range from $3.79 to $3.87, compared to the consensus estimate of $6.00, and projects revenues to be between $3.79 billion and $3.87 billion, which is short of the anticipated $4.03 billion.
The company remains committed to expansion, planning to open approximately 230 new stores by the end of the year. Anderson expressed enthusiasm for the growth, stating, "We are excited to open approximately 230 new stores by the end of this year and bring Five Below to more neighborhoods, offering trend-right, WOW items at amazing value."
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